Wal-Mart (WMT) bribery: share prices tumbling after allegations of corruption
A shopping cart at a Wal-Mart store in Los Angeles in seen in November, 2009.
Wal-Mart's investors will be fuming today as share prices in the US and Mexico are tumbling amid allegations that the company paid millions in bribes to Mexican officials.
The New York Times reported Saturday that the company’s leadership had shelved an internal investigation that uncovered $24 million in alleged bribery on Wal-Mart's way to becoming Mexico’s largest private employer.
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The allegations could lead to high-level resignations and hinder company efforts to expand.
By mid-afternoon, shares in Wal-Mart were down nearly 5 percent, or $3.035, on yesterday’s close at $59.415. Shares in the company’s Mexican subsidiary Wal-Mart de Mexico have plummeted even further, currently trading down 11.61 percent at 38.06 pesos.
The Mexican share price had earlier today dropped as much as 16 percent, its steepest decline in 17 years, according to Bloomberg. The parent company’s decrease was the biggest intraday drop in two years, according to the financial news service.
The Wall Street Journal noted that the declining share price was dragging the Dow Jones Industrial Average lower. The index was down nearly 100 points by mid-afternoon at 12,930.91.
Today’s declines have wiped out the stock’s 2012 gains entirely.
Bloomberg noted that in December, Wal-Mart filed notice with the Securities and Exchange Commission saying the company was reviewing its compliance with the 1977 Foreign Corrupt Practices Act, a law that criminalizes corporate bribery of foreign government officials.
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According to Reuters, Wayne Hood, an analyst at BMO Capital Markets, wrote in a research note that the bribery allegations could hinder Wal-Mart’s growth globally.
"Articles like this will be used against the company by activists and competitors when it attempts to open stores in the US and abroad," was quoted as saying.
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